Fed Cuts Bond-Buying by $10B: More on the Way?

4/30/2014 2:53PM

PIMCO Market Strategist Tony Crescenzi joins Simon Constable along with WSJ's Jon Hilsenrath and Emma Moody for full analysis of the Federal Reserve's decision on its bond-buying program and interest rates. Photo: Getty Images

This transcript has been automatically generated and may not be 100% accurate.

... I ... interesting that many mullets that's now down ... the slowdown a lot of people left were calling Matt I guess the snow down because it was to do with a cup of cold weather ... to they make express that every round indication that that's what they know it is ... the answer ... when your ... heart ... to the ... point that are worth ... it ... it dictated ... that started at the call to ... them ... they're acknowledging that that that that ... that that we had the first quarter was worse than expected ... but they are a good ... job of it had to do with ... whether ... digital ... or ... dough ... to be walking to her right now ... this being the pickup in growth ... is ... expected to be that there are ... to work through it ... he's ... we had to adapt well to get that ... tht tht ... last time around was a was a descent so I was was this time unanimous is people aren't expected to question them ... this is ... unanimous ... this is Janet Yellen for you dad ... fo everybody voted with her and ... we see through to reboot so far this year two of them have been unanimous ... it's going to be authentic ... the epic ... it ... interest rates ... but there is no water ... with the euro ... rising slice nine with all since the crisis and things like that to skyrocket played the think of a saying that that's a WA read ... that a word that inflation is low it that day ... inflation ... for the ... week with a two percent objective ... with it if the economy ... that that again ... there are worried that the defendant ... I should take ... note of indicated it don't watch is the word ... the baby ... and that ... the GDP report ... the not too high ... it's ... Milton meetings with his no press conference from Washington to to to something with nothing questions ... into the chair ... they're more like a pregame show for big decisions when they laid the groundwork for a bigger decision making ... last month for example if it ... shifted to qualitative guidance from quantitative ... easing business and information about the Fed board having met yesterday ... it seems perhaps they were discussing exit strategy of medium term issues like that ... on any sense as to what the Fed may have been discussing than what we might hear about that abstinence a few weeks or ... perhaps at the June FOMC meeting ... it ... I ... what's going on here is that ... the Fed had to ... make it to get him to enter into that tube out ... the framework that ... this was the target ... fed funds rate ... the operation ... they ... do have an exit strategy which is that for years ... eight ... up ... he bought for to catch up ... next year ... it got kind ... they were ... Ch ... Ch ... Wall Street don't we appreciate time of the US on that's on the vs day don't come if you just joining us now ... the Fed has reduced its bond buying program to forty five billion dollars a month that's that was a loss leader expected man its guidance that is still that to the considerable time before they raise the cost of borrowing with all ten acres NZ and Emma Moody hit ... of with this that and am up ... aam it is interesting that John was talking and just now about how the Fed exits and how they work that out that is a conceptual problem it has never been done before ... net earnings outlook fall I think we own I that is probably not going to be ... completely Smith process as John mentioned that this can be ... a lot of discussion within the fed a lot of differing views in and I think also that ... within the financial markets is can be a ... a lot of bouncing around assist people kind of costs what what the message is that the Fed is is is getting to that to the investment community and and D'Antoni on the investment side of things you're a strategist at Pimco than I did did the world's largest bond fund the you know a lot of money to invest at how would you recommend and small investors ... invest that money on the basis of all the Fed getting out of the money printing business ... what will Pimco be discussing some of the longer term issues at its annual secular forum next week it holds in Newport Beach where we look at them the horizon on three down a three to five-year outlook ... basis and what we really wanna determined this time perhaps amongst many issues is ... how this can the U S economy actually grow in terms of nominal GDP has been growing three to four a nice to verify six seven ... because of a big impact on how high the federal funds rate will go and hence ... how we should position in terms of duration which is average maturity at which I still like the long-awaited Lara was a time there is a trend here is that ... what's wishing we'd be on the yield curve and was volatility speck out why should we expect credit spreads to go ... the concluding into a well known collectively discuss it but that the general feeling right now is that ... there is a limit to how fast the U S economy can grow the Fed is ... refueled the reserve targeting regime that we have a rematch this is a fractional reserve system is I'm fine with this is how much was of the bank's half the half ... and some people ask the tothe pointed saying ok Janet Yellen single reserves of the bank's ... fast and effectively tightening some people say that this for the Fed buys bonds and into the Carson from banks and banks say well thank you fed from buying bonds from us but we don't have anything to do with this money without making any loan so they hold it for us and store it ... as an excess reserve as they call it in the past seventeen Windows users out ... in the crease money literally out of thin air but we know that the euro is probably ending is so ... critical element and in the three fighter outlook is how fits credit creation will be it seems that banks are under pressure to land less than they used to take fewer risks and they use to it is probably will limit then ... how fast the economy from one of the point ... demographics we as an aging population ... we know will be at the golf course with the grandkids are traveling the world rather than being a factory ... that sent them and doing those things I've reduces the growth rate of the economy ... those things and many other factors mean ... the time of course fast and when to raise rates as much because typically ... will raise rates somewhere close to where ... the economy's growing before the inflation adjustment and productivity just that for some foreigner speaking that will be good for the bond market and how he has also was expected so this will over time make you want to say when yields rise I wanna take advantage of this in the longer maturities ... today we say the because we think that can be patient IRAs be ... investing in the short intermediate maturities we are protected by the Fed because all I could move fast or by March when it gets moving it's up ... to my family has refueled the tank but it's slower moving car the Prius and you can refill a single long distance like the McCarthy Under today had I had a had a pretty has ... reassigned on the model get ten for the bond market to ... the Dow which is not a phrase is on target for a wreck or close that's the Dow on up aam you know that wanted to basically have a record close above them aspects ... come down a little bit about that's been nom basically coming down with the olive that the tech ... and biotech bubble seems to be some the flight in its own posting ... on the Essen P about ... pacing a tea candle on target for ... aam but a very impressive cause of the Emma ate it seems that the back of the market likes tepid music likes oh what ... the Fed is worried about the economy still ... the economy itself doesn't look good of a lot so this up it's a very dismal science they signed as a dismal science I think that ... they were very few surprises impacts and the Fed seemed a little more down the economy than people might like that ... when you still have the Fed pumping as much money into the Makenzie a month after month I it's it's not really can make the needle of ... this content from Altria some some ... well on and on the IPO is everything from the long distance with the despot in the fiscal and guests in that and and it can go very fast because ... the engine is a strong the engine meaning that demographic elements that credit though most banks are lending much ... people more cautious about the savings in many things that make me Conko ... Sullivan used to fiscal the fiscal side of the Queen's reign of Washington to mean much to help the economy ... so you can refill in all you want that but the Cummins engine just can't grow very fast I keep saying this race moving ... the stock market loves that ... stock market does look ... like a trend watch because that is how much they take it I'm Simon Constable and ... that's that